Will CBOT wheat (Any months) trade at a premium to beans? And will they trade in the teens by year end. Please share your thoughts.
No and No! Wheat seems to be signaling a top hear soon with the dec/march spread getting no bid at all anymore. To much bullish news going on in this market. I would imagine that the report will be bullish but not to the extent everyone is thinking. Beans I think will get a bearish report number and trade a decent amount lower as we go into harvest but I think a huge rally is in the making for beans and corn after harvest. If you want to trade wheat selling march/july spread will be the biggest money maker if beans and corn start to get a substantial bid post harvest!
"Extremely likely" and "maybe". (1) The wheat trading at a premium to beans seems too inevitable. (2) The December-2007-(CBT) Wheat during delivery would be a good time for an ascent to $13/bushel. Since it would be trading with no price limit, it would be most dramatic if it rallied AND collapsed a few dollars in one day to mark the "final top". Alternatively, if it were to have a "weird" expiration similar to the March-1996 and touch $13 as its final trade before the final buzzer. Stay tuned.
What the hell? Are you kidding? You and all the others that posted yes on the poll must be the fools who keep taking the other side of my short 10.80 and 11.00 dec calls. Thanks its good to have liquidity !
youngtrader- How can you predict where wheat will go if it's never been here before? Hard for me to figure. Only thing I have to go on is the current action and it is decidedly bullish! The trend is up and it isn't bending down. Of course, it may not bend, but plummet. So what do you think is best to short Dec07 or Mar08? I am looking for a place to get back short but I am not sure which contract would be best. I know I don't want to be short Dec07 the last couple of weeks of that contract. Boy will that get crazy! I have heard comparisons to Soybeans in the 1970's when it was limit up 20+ days. Do you think the spec hedge funds can ramp it up that much? That would be 600+ pts higher. Hell, if wheat goes to $15 the ganja growers around here may switch to a different cash crop.
Very Bullish news worldwide. Wheat surpassed $9 a bushel for the first time as a drought in Australia and Canada cut production, pushing global stockpiles toward a 26-year low. The U.S. Department of Agriculture today cut its estimate of Australia's wheat crop to 21 million metric tons from last month's estimate of 23 million tons. Some analysts expected the USDA forecast to show Australian production would be as low as 15 million tons. Canada will produce 20.3 million tons, a 5.6 percent drop from August's estimate, the USDA said. Increasing demand from Egypt to India and weather damage to global crops have driven up prices in Chicago by 79 percent this year. Users including Kellogg Co., the biggest U.S. cereal maker, General Mills Inc, Sara Lee Corp. and PT Indofood Sukses Makmur, the world's biggest producer of instant noodles, are responding by raising prices, fueling inflation. ``The market is in a real frenzy,'' said Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. ``It's feeding through to the consumer.'' Wheat for December delivery rose 8.75 cents, or 1 percent, to $8.9925 a bushel at 10:40 a.m. on the Chicago Board of Trade, after earlier reaching $9.1125 in overnight trading. The most- active contract has more than doubled in the past year. Egypt, Jordan, Japan and Iraq plan to buy 460,000 tons of wheat. India is seeking to import 5 million tons this year to replenish its inventories. The grain, used in livestock feed, noodles, cakes and bread, trades in 60-pound (27.2-kilogram) bushels, each with enough grain to make 73 loaves, according to the Web site of Lake Oswego, Oregon-based bread.com. Global Rally Milling wheat for November delivery on the Liffe exchange in Paris rose 3.75 euros, or 1.4 percent, to 279 euros ($387) a metric ton as of 5:13 p.m. local time. That's equal to $10.53 a bushel. Prices have doubled in the past 12 months. Prices have gained 84 percent this year and climbed to a record 285 euros on Sept. 6. On the South African Futures Exchange in Johannesburg, wheat for December delivery rose 65 rand, or 2.1 percent, to close at a record 3,242 rand ($452) a ton. Rising prices of food, from wheat to milk and pork, are stoking inflation at a time when traders expect the U.S. Federal Reserve to cut interest rates to bail out the housing market and avoid a recession. China's inflation rate accelerated to a 10- year high in August, fueled by food prices. ``When you look at grains prices from a historical perspective, they're actually not that high,'' Daniel Edzes, who grows sugar beet, grains and potatoes on his 50-hectare (120- acre) farm in the north of the Netherlands, said in an interview today. ``Wheat prices right now are trading at about the same level as when I first started farming 35 years ago.'' Smaller Australia Crop The harvest in Australia, forecast by the USDA to be the world's second-largest wheat exporter this year, may be as low as 15 million tons, Rabobank Group has said. The government forecaster, the Australian Bureau of Agricultural and Resource Economics, estimated the crop in June at 22.5 million tons, more than double last year's drought-damaged total of 9.9 million. Its next update is scheduled for Sept. 18. Dry weather in central and southeast Australia may persist in the ``short-term'' as cooler ocean temperatures restrict the formation of rain-producing clouds, the Melbourne-based Bureau of Meteorology said today. ``Australia's not going to have a good crop, we know that,'' said Tom Leffler, owner of Leffler Commodities LLC in Augusta, Kansas. The country's crop may still thrive if enough rain falls in the next 30 days, he said. ``I'd be cautious about writing Australia off.'' Declining Inventories Global wheat supplies are expected to decline to 112.4 million tons by the end of the marketing year on May 31, 2008, the USDA said today in Washington, down from last month's estimate of 114.8 million tons. The U.S. is the world's biggest wheat exporter. Barley prices in Winnipeg, Canada, gained 41 percent in the past year on increased demand for animal feed and for brewing beer. Canada is one of the world's biggest barley producers. Corn has gained 53 percent in the same period, as demand for grain-based ethanol surged. Downers Grove, Illinois-based Sara Lee, maker of the bread of the same name and Jimmy Dean sausages, said yesterday it will keep increasing prices to cover higher commodity costs. Australian Agricultural Co., the nation's biggest rancher based in Queensland, said cattle prices will need to rise. Premier Foods Plc, the U.K.'s biggest producer of cakes and instant soup, on Sept. 4 said it may further increase prices for its Hovis bread brand and other products. ``There's not a lot they can do about it,'' Jonathan Banks, an analyst at ACNielsen in London, said in a Sept. 10 interview. ``They're getting a big hit. They have to put the price increases through because it's not an inherently profitable category to begin with.'' Asian Food Prices Indofood Sukses Makmur, based in Jakarta, will increase flour prices in each of the next four months to pass on costs, Franciscus Welirang, vice president-director in charge of the flour division, said by phone today. Japanese bakers and millers are studying price increases. ``Flour prices will rise in the near future and we are considering raising prices for our products,'' said Fuminao Wake, a spokesman for Yamazaki Baking Co., Japan's largest bakery. Nisshin Seifun Group of Japan, a miller, is considering raising flour prices for the second time in six months, after an increase in May that was the first in 24 years.
Perfect time for it to top. Such bullish news that we locked limit down into the close. Tomorrow should be interesting.
The reason are as follows: We are just too damn high! dec/march spread getting no bid at all. corn/wheat spread at all time highs so wheat comes down or corn goes up. Bull trends end on the most bullish situations. I would recommend playing the spreads. Seems to be march has been the strongest of all the contracts lately. I would sell march in flat price or sell like march/may or march/july spread. If we start to get a big bid in beans and corn you could see that march/july plummet because july is the new crop month of wheat and has been beat up alot (during the limit up moves everyday in dec and march. july would be down 10 cents sometimes!) Selling way out of the money calls isn't a bad idea eather!